Prime Minister KP Oli has all the right foreign policy ideas. In his two terms as the gov­ernment head, he has made bal­ancing India and China the central plank of Nepal’s post-blockade for­eign policy. In large part this is a personal calculation. Near the end of his political career, and with his health iffy, Oli is deter­mined to leave behind a strong leg­acy: of a Nepali prime minister who not only talked about ‘equidistance’ with the two neighbors, but actually did something about it. With the memory of the blockade fresh on his mind, he embarked on the historic state visit to China in 2016, where he would sign a landmark trade and transit treaty. If this treaty came to fruition, never again would India be able to blockade Nepal. This is why people expected the protocols to make the treaty functional to be signed during Oli’s second state visit to China earlier this month.

 

It wasn’t meant to be. The 2016 treaty is not mentioned in the 14-point joint statement issued at the end of Oli’s China trip. Some think this owes to the recent thaw in relations between PM Oli and his Indian counterpart Narendra Modi. Oli, in this reck­oning, is mak­ing a deliberate attempt to maintain a safe distance from China at India’s promoting, for instance by dilly-dallying on the treaty protocols. Or perhaps things were already out of Oli’s hands.

 

The Trump effect

 

Much like Nepal-India relations have recently warmed, so have India-China ties. After the Wuhan Summit in April between Xi Jinping and Narendra Modi, India and China seem intent on working together and mounting a common front in favor of unhindered globalization—which has brought the two countries rich rewards—against a protectionist US. Both Modi and Xi Jinping realize that it is unwise to rely too much on the ever-unpredictable Donald Trump. Some go so far as to argue that India and China have recently even settled their respective spheres of influence in South Asia.

 

“Such a possibility cannot be ruled out,” says Bhaskar Koirala, the Director of Nepal Institute of International and Strategic Studies. “Why was Nepal excluded from the recent Boao and SCO summits in China? Perhaps this was part of the new Chinese strategy of accommo­dating Indian concerns.”

 

Nowhere is this change in Indian perception of China more evident than in the Indian media, which in earlier times used to play up the specter of Nepal being gobbled up by China at the slight­est hint of Nepal-China rapprochement. But goaded by the South Block to tone down their anti-China pos­turing, the Indian media were this time largely silent on Oli’s China vis­it; some even wel­comed it.

 

“Sandwiched between two big countries, it is natu­ral that Nepal should seek to maximize its geography to its own advantage,” wrote The Indian Express in its June 25 editorial. “To that end, it has a tough balancing act to do, and India—no strang­er to tightrope walks itself—should be able to appre­ciate that”. This is an incredible turnaround from their strident blockade-time anti-Oli hysteria.

 

Border patrol

 

Other factors too could have delayed the trade and transit pro­tocols. The 14-point joint statement offers some clues, point number 10 in particularly. It says the two sides have agreed to strengthen “coopera­tion between law enforcement agen­cies” and to “negotiate the Treaty on Mutual Legal Assistance in Criminal Matters and Treaty on Extradition”. This is considered vital in order to “strengthen cooperation on the administration of border areas and fight against illegal border crossing and transnational crimes”.

 

China is clearly worried about opening the sen­sitive region of Tibet without Nepal first giv­ing clear assurance that absolutely no anti-China activities will be permitted in border areas. Hence the emphasis on the extradition of potential Tibetan infiltrators into Nepal. This also suggests that China is not assured that Nepal, at present, can offer such guarantees. But in the view of security analyst Geja Sharma Wagle, as the level of engagement between Nepal and China increas­es, “it is only natural that China is more worried about the security implications of deepened ties.”

 

The other major agreement signed during Oli’s China visit earlier this month concerns a rail link. Both President Xi and Prime Minister Oli described the MOU on rail connectivity as the “biggest achieve­ment in bilateral history.” Chinese foreign ministry spokesperson Geng Shuang later informed that in the first phase the Shi­gatze-Key­rung line (that is to be completed by 2020) will be extended to Nepal’s Rasuwagadhi and in the second phase to Kath­mandu. Significantly, the ear­lier proposal of Nepal that the line be extended up to Lumbini on the Indo-Nepal border has been dropped. (The whole project is expected to take around six years.)

 

But opinion continues to be divid­ed on the rail project. As Raamesh Koirala pointed out in Naya Patrika, a high-speed rail may not be a good idea considering the difficult topog­raphy of border areas and that it is much cheaper to build all-weather roads instead. Things should be clearer in August when a Chinese team completes its feasibility study on the cross-border railway.

 

Whither Lipulekh?

 

There were other significant agreements in China this time, most notably on 600 MW Marsyangdi Hydro Project, as well as on set­ting up a $140-million cement factory, energy cooperation, opening of the closed Tatopani bor­der, etc. The trade and transit protocols, the government has assured, will also be signed sometime in July.

 

Thus while the intent of PM Oli to diversify Nepal’s rela­tions away from India, which necessarily entails closer ties with China, is prin­cipally right, he will have to get the modal­ity of connectivity projects rights. He will also have to increasingly heed China’s security concerns. Moreover, the Nepali prime minister could have a tough job of trying to pro­tect Nepali interests in light of the recently heightened engagement between India and China.

 

Perhaps the most notable omis­sion in the June 21 Nepal-China joint statement was the issue of Lipulekh, the tri-junction point between Nepal, India and China. In 2015 India and China had agreed to increase trade connectivity through this border point without consulting Nepal. As the editorial in the Indian newspaper hinted, it will indeed be a tough balancing act for Oli in the next few years O